The SBIR/STTR Policy Directive, explained

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are run by a dozen federal agencies, but the operating rules come from one document: the SBIR/STTR Policy Directive issued by the U.S. Small Business Administration (SBA). The edition posted on SBIR.gov is effective May 3, 2023, and the SBIR.gov policies page lists no later edition as of October 25, 2026. The directive says what each phase is for, how big an award may be, how long it may run, who is eligible, what data rights an awardee keeps, and what agencies must report. Anyone reading a solicitation, a Phase II contract, or a data rights legend is reading language the directive required.

This post explains what the directive is, how it is organized, what it binds agencies to, how the editions of 2014, 2019, 2020, and 2023 differ, how Public Law 119-83 changed the statute underneath it, and where agencies have room to deviate. For the phases themselves, see SBIR Phase I, II, and III, explained.

Legal basis in 15 U.S.C. 638

Section 1(a) of the directive states its authority: sections 9(j) and 9(p) of the Small Business Act require SBA to issue policy directives for the general conduct of the SBIR and STTR programs. Section 9 of the Act is codified at 15 U.S.C. 638. Subsection (j) covers SBA policy directives for the general conduct of SBIR programs, and subsection (p) is titled "STTR policy directive."

Section 1(b) explains why there is one document. Because most of the policy for the two programs is the same, SBA issues a single directive, and the word program means both unless one is named. Section 1(b)(1) lists the STTR-only provisions: the definition of Research Institution in section 3(cc), management of the STTR project in section 7(k), allocation of intellectual property rights in an STTR award, cited there as section 8(c) although the text sits at section 8(d), and the Phase 0 Proof of Concept Partnership pilot in section 12(e). Section 1(b)(2) lists the SBIR-only provisions, including Direct to Phase II awards in section 4(b)(1)(ii) and the rules for firms majority-owned by venture capital, hedge fund, or private equity firms in section 6(a)(6), although section 10(a) of Public Law 119-83 has since extended the statutory Direct to Phase II authority to STTR. The post on STTR vs SBIR covers those differences.

Section 1(e) states the binding effect in plain terms. Federal agencies participating in the programs "are obligated to follow the guidance provided by this Policy Directive," and each must review its rules, policies, and guidance to ensure consistency and make any changes needed. Section 11(a)(2) adds that it is essential that agencies not promulgate any policy, rule, regulation, or interpretation inconsistent with the Act, the directive, or SBA's regulations, and that SBA monitors agency policies and procedures for that purpose.

The directive is not itself a regulation. SBA publishes each edition and amendment in the Federal Register as a notice, and the April 2, 2019 notice describes its action as final SBIR and STTR policy directives. SBA's size and eligibility rules for the programs are codified separately at 13 CFR 121.702, and section 11(a)(1) of the directive says SBA sets policy both by publishing the directive and by promulgating regulations.

How the directive is organized

The table of contents of the May 3, 2023 edition lists 12 numbered sections and 3 appendices, with these starting pages:

Section 2 summarizes the statute. Each agency with an extramural research or research and development (R/R&D) budget over $100,000,000 must run an SBIR program and obligate at least 3.2 percent of that budget to it from fiscal year 2017, and each agency with an extramural budget over $1,000,000,000 must run an STTR program at 0.45 percent from fiscal year 2016. Section 2(e) restates the three-phase structure. Section 2(j) explains how the notice publication rules of section 8(e) of the Act apply to SBIR contracts, including exemptions for the Phase II and Phase III award processes.

Section 3 holds the definitions that the rest of the document depends on, including Commercialization, Essentially Equivalent Work, and the data rights terms added in 2019. Section 4 describes each phase. Section 5 covers topics, the master schedule, and the requirement that each agency issue a program solicitation at least annually. Sections 6 through 8 are the operating core: who may apply, how awards are sized and timed, and what terms go into the funding agreement. Section 9 is a list of agency duties, section 10 is reporting, section 11 is SBA's own role, and section 12 covers the Federal and State Technology (FAST) partnership program, the Commercialization Readiness Program (CRP) at the Department of Defense, a CRP pilot for civilian agencies, the Technology Development Program, and the STTR Phase 0 pilot.

Appendix I opens by saying the Act requires simplified, standardized, and timely solicitations and a uniform process, so its instructions deliberately depart from normal government solicitation formats. Appendix II is a one-line pointer: the data fields agencies and awardees report are maintained on SBIR.gov rather than printed in the directive. Appendix III is the disclosure template added in 2023.

What the directive binds agencies to

Award amounts and periods

Section 7(i)(1) says a Phase I award, including modifications, generally may not exceed $150,000 and a Phase II award may not exceed $1,000,000, and that agencies may exceed those guideline amounts by no more than 50 percent. Section 7(i)(2) says SBA reviews the amounts every year for inflation and posts adjustments on SBIR.gov, effective for solicitations issued on or after the adjustment date. The SBIR.gov About page states that as of October 16, 2026 an agency may issue a Phase I award of up to $335,937 and a Phase II award of up to $2,239,578 without SBA approval, and that any award above those levels requires a waiver. Section 7(i)(3) says there is no dollar limit on Phase III. Section 7(h) says the Phase I period of performance normally should not exceed 6 months for SBIR or 1 year for STTR, and Phase II normally should not exceed 2 years.

Eligibility and performance

Section 6(a)(2) requires the awardee to perform at least two-thirds of the research effort in an SBIR Phase I and at least one-half in an SBIR Phase II, and in STTR the small business must perform not less than 40 percent and the research institution not less than 30 percent. Section 6(a)(3) requires the principal investigator's primary employment to be with the small business, or with the research institution in STTR. Section 6(a)(7) requires agencies to apply two SBA-approved benchmarks for progress toward commercialization before making a new Phase I award to a firm with multiple prior awards. Section 6(b) requires every applicant to register in SBA's Company Registry at SBIR.gov and requires a commercialization plan with each Phase II proposal.

Data rights

Section 8(b)(1) says the Act lets a small business awardee retain rights to data generated under an SBIR or STTR award, and that for properly marked SBIR/STTR Data during the SBIR/STTR Protection Period the government must provide protection comparable to, and at least as strong as, the protection it gives to delivered proprietary data developed exclusively at private expense. Section 9(a)(8) requires each agency to ensure the rights in data developed under each Phase I, II, and III award are protected properly. The post on SBIR data rights covers the protection period, the DFARS and FAR clauses, and the legend.

Agency duties and reporting

Section 9(a) lists 13 general responsibilities. Among them: determine the categories of projects for the program while balancing high-risk exploratory projects against likelier successes; release solicitations on SBA's master schedule; evaluate proposals and select awardees unilaterally; require a succinct commercialization plan with each Phase II proposal; collect and provide data to SBA; make payments in full within 12 months of completion; provide an annual report to SBA; establish the agency's commercialization benchmarks and include the information needed to implement them in each solicitation; and require the Appendix III disclosures as part of the due diligence program under 15 U.S.C. 638(vv). Section 9(b) covers Technical and Business Assistance (TABA), and section 10 sets out the reporting that agencies, applicants, and awardees owe SBA through SBIR.gov.

The 2014, 2019, 2020, and 2023 editions

The SBIR.gov policies page archives four prior edition sets, each with its Federal Register notice.

2014. SBA published a final SBIR directive on August 6, 2012 at 77 FR 46806 to implement the SBIR/STTR Reauthorization Act of 2011, then amended it in a notice dated January 8, 2014 at 79 FR 1303 in response to public comments. That notice records that commenters asked SBA to strengthen the data rights and Phase III preference language, and that SBA agreed those areas needed clarification and would address them in a later revision. SBIR.gov lists the resulting SBIR and STTR directives, still two separate documents, as dated February 24, 2014.

2019. The notice published April 2, 2019 at 84 FR 12794, effective May 2, 2019, is the largest revision. The summary says SBA "combines the two directives into one document" and clarifies the data rights and Phase III preference, adds data rights definitions, and clarifies the commercialization benchmarks. The section-by-section discussion records that SBA moved the benchmarks from section 4 to section 6 because they affect eligibility, clarified the Phase III preference agencies must give awardees, and added a non-disclosure agreement that a non-government recipient of SBIR/STTR Data must sign. It also records that, after 42 comments, SBA rejected two of three linked data rights proposals, a 12-year protection period and unlimited government rights after the period, adopted a 20-year period instead, and kept the third, eliminating extensions of protection for data referenced in subsequent awards. SBA said it did not intend to alter the rights under funding agreements that predate the notice.

2020. A technical amendment dated August 17, 2020 at 85 FR 50062, effective October 1, 2020, clarified section 6(a)(5) to confirm that successor-in-interest entities are eligible to receive Phase III awards. SBIR.gov archives an October 1, 2020 edition of the directive.

2023. The notice of technical amendments dated April 3, 2023 at 88 FR 19704 took effect May 3, 2023. It amended section 9(a) and added Appendix III, a template for agencies to collect the disclosures of investment and foreign ties that the SBIR and STTR Extension Act of 2022, Public Law 117-183, required at 15 U.S.C. 638(g), (o), and (vv). SBA designated it a direct final rulemaking because the template adopts statutory language with minor edits.

How Public Law 119-83 affects the directive

Public Law 119-83, the Small Business Innovation and Economic Security Act, was approved April 13, 2026. Section 9 strikes the September 30, 2025 authorization date in 15 U.S.C. 638(m) and (n) and inserts September 30, 2031. The law amends the statute, not the directive, so the directive still reads as it did in 2023 while the statute it implements has moved. Section 2 of the directive still says the programs are authorized until September 30, 2022 or as otherwise provided in law after that date, which is how the directive accommodates later extensions.

The changes most likely to force a directive revision are these:

• TABA must be offered. Section 7 of the law rewrites 15 U.S.C. 638(q). Agencies "shall authorize" awardees to use up to $6,500 per Phase I project and $50,000 per Phase II project for technical and business assistance, either inside or in addition to the award as the agency head decides, through a vendor the small business selects or by hiring, augmenting, or training staff. The directive's section 9(b) still describes an agency-selected vendor, a $6,500 per year Phase I amount, and a vendor requirement.
• Strategic breakthrough awards. Section 3 adds 15 U.S.C. 638(ff)(3), letting an agency award up to $30,000,000 to a small business and its affiliates with a total period of performance of not more than 48 months, with at least 100 percent matching funds and at least one prior Phase II. The directive's section 4(b) has no such category.
• Proposal limits. Section 4 adds subsection (aaa), requiring each agency's SBIR or STTR program director, for fiscal year 2027 and after, to set a limit on the number of Phase I and Direct to Phase II proposals a firm may submit, by fiscal year, by solicitation, or by topic.
• Pilot extensions. Section 10 moves the end dates of Direct to Phase II, the civilian CRP pilot, the increased minimum performance standards, the due diligence program, and other pilots to September 30, 2031, adds the Department of Energy and NASA to the Direct to Phase II authority, and extends that authority to STTR.
• Data fields. Section 8 adds to the SBIR.gov database whether each award is a Direct to Phase II, a subsequent Phase II, a strategic breakthrough award, or a Phase III prime or subcontract, and directs the General Services Administration to add the same flags to the Federal Procurement Data System.

Agencies are implementing the statute in solicitations ahead of a revised directive. The Department of War's 2027 SBIR Commercial Solutions Opening preface for Release 1 states that effective October 1, 2026 a small business may submit one proposal per topic, and its section 1.9 says the Small Business Innovation and Economic Security Act, section 7, "mandates agencies to offer TABA."

Where agencies may deviate

The directive sets a floor and a frame, not a script. Section 1(b)(3) says SBA fulfills the statutory requirement to standardize proposal, selection, contracting, compliance, and audit procedures while allowing participating agencies flexibility in operating their individual programs. The 2019 and 2023 Federal Register notices put the limit in one sentence: an agency may tailor its program to its needs, but no agency may develop and apply policies, directives, or clauses that contradict, weaken, or conflict with the directive.

Within that limit, the directive names specific flexibilities:

• Work share. Section 6(a)(2) says deviations from the SBIR two-thirds and one-half requirements may occur and must be approved in writing by the funding agreement officer after consulting the agency SBIR/STTR program manager. Deviations from the STTR 40 percent and 30 percent split are not allowed because the statute sets them.
• Principal investigator. Section 6(a)(3) allows written deviations from the primary employment rule and lets an agency approve replacing the principal investigator.
• Periods of performance. Section 7(h) says agencies may provide a longer period than 6 months or 2 years where appropriate for a particular project, and that the Phase II period is negotiated.
• Award size. Section 7(i)(2) says agencies may issue awards for less than the guidelines, and section 7(i)(4) lets an agency request a waiver to exceed the guidelines by more than 50 percent for a specific topic, which SBA decides within 10 business days and which lasts one fiscal year.
• Topics and selection. Section 9(a)(1) and (3) leave the categories of projects, the evaluation, and the selection to each agency unilaterally.
• Waivers. Section 10(k) lists four waivers an agency must request from SBA: more time between a solicitation closing date and award notification, exceeding award guidelines by more than 50 percent, not using SBIR funds under the administrative funding pilot, and subcontracting part of an award back to the issuing agency.

One deviation that is not available: agencies may not use an invitation, pre-screening, or pre-selection process for Phase II eligibility, under section 4(b)(4).

What to check

• Which edition does the solicitation or contract cite, and does the clause match the May 3, 2023 text or an archived edition on SBIR.gov?
• Does the award amount fall within the SBIR.gov ceiling for the solicitation date, or is there an SBA topic waiver under section 7(i)(4)?
• Is a work-share or principal investigator deviation approved in writing by the funding agreement officer, as section 6(a)(2) and (3) require, and is the program SBIR rather than STTR?
• Does the data rights clause give the protection section 8(b) describes, and does it use the directive's definitions from section 3?
• Where the solicitation cites Public Law 119-83, for TABA, proposal limits, or strategic breakthrough awards, does it also say how it reconciles the statute with the 2023 directive text?
• Has SBIR.gov posted a directive edition later than May 3, 2023 since this was written?

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Questions people ask

What is the SBIR policy directive?

The SBIR/STTR Policy Directive is the U.S. Small Business Administration document that tells every federal agency with an SBIR or STTR program how to run it. Section 1 of the directive says sections 9(j) and 9(p) of the Small Business Act require SBA to issue it, and section 1(e) says participating agencies are obligated to follow its guidance and must review their own rules for consistency with it. One directive covers both programs.

Is the SBIR policy directive a regulation?

No. SBA publishes the directive in the Federal Register as a notice, not as a rule codified in the Code of Federal Regulations, and the 2019 notice calls it final policy directives. Section 11(a) of the directive says SBA sets program policy by publishing the directive and by promulgating regulations, which are separate. The size and eligibility rules for the programs are in regulation at 13 CFR 121.702, while the operating rules are in the directive.

What is the current version of the SBIR/STTR Policy Directive?

The edition posted on SBIR.gov carries an effective date of May 3, 2023. The SBIR.gov policies page lists it as the current directive with a separate appendices file, and archives the October 1, 2020 edition, the May 2, 2019 edition, and the February 24, 2014 SBIR and STTR directives. The 2023 change was a technical amendment adding Appendix III, a disclosure template for foreign ties, published April 3, 2023 at 88 FR 19704.

What are the sections of the SBIR policy directive?

The 2023 directive has 12 sections: 1 Purpose, 2 Summary of Statutory Provisions, 3 Definitions, 4 Phased Structure of Programs, 5 Program Solicitation Process, 6 Eligibility and Application Requirements, 7 Program Funding Process, 8 Terms of Agreement Under SBIR/STTR Awards, 9 Responsibilities of Agencies, 10 Reporting Requirements, 11 Responsibilities of SBA, and 12 Supporting Programs. Appendix I gives solicitation instructions, Appendix II points to data fields on SBIR.gov, and Appendix III is the foreign affiliation disclosure template.

What does the SBIR policy directive say about data rights?

Section 8(b) of the directive says the Act lets a small business awardee retain rights to data generated under an SBIR or STTR award, and that for properly marked SBIR/STTR Data during the SBIR/STTR Protection Period the government must give protection comparable to and at least as strong as it gives to data developed exclusively at private expense. Section 3 defines SBIR/STTR Data, the Protection Period, and related terms, and section 9(a)(8) requires agencies to protect those rights in every phase.

Can an agency deviate from the SBIR policy directive?

Only where the directive allows it. The 2019 and 2023 Federal Register notices say an agency may tailor its program but may not adopt policies, directives, or clauses that contradict, weaken, or conflict with the directive. Section 6(a)(2) allows written deviations from the SBIR work-share percentages but none for STTR, section 7(h) lets agencies set longer periods of performance, and section 10(k) lists the waivers an agency must request from SBA, such as exceeding award guidelines by more than 50 percent.

What changed in the 2019 SBIR policy directive?

The notice published April 2, 2019 at 84 FR 12794, effective May 2, 2019, combined the separate SBIR and STTR directives into one document, clarified data rights and the Phase III preference, added data rights definitions, and moved the commercialization benchmarks from section 4 to section 6. After comments, SBA rejected a 12-year protection period and unlimited government rights after the period, adopted 20 years, and kept its proposal to end extensions of protection through later awards.

How does Public Law 119-83 affect the SBIR policy directive?

Public Law 119-83, approved April 13, 2026, amended 15 U.S.C. 638 rather than the directive. It moved the authorization date to September 30, 2031, required agencies to authorize up to $6,500 per Phase I project and $50,000 per Phase II project for technical and business assistance, added strategic breakthrough awards of up to $30,000,000, and required proposal limits from fiscal year 2027. The directive posted on SBIR.gov still carries the May 3, 2023 date, so agencies are implementing the statute directly in solicitations.

Where does the SBIR policy directive set award amounts?

Section 7(i)(1) sets guideline amounts of $150,000 for Phase I and $1,000,000 for Phase II and lets agencies exceed them by no more than 50 percent. Section 7(i)(2) says SBA adjusts the amounts for inflation each year and posts the adjustments on SBIR.gov. SBIR.gov states that as of October 16, 2026 an agency may award up to $335,937 in Phase I and $2,239,578 in Phase II without SBA approval. Section 7(i)(3) says Phase III has no dollar limit.

What does the STTR policy directive say?

There is no separate STTR directive anymore. Since the 2019 edition, SBA issues a single SBIR/STTR Policy Directive, and section 1(b) says the word program means both unless one is named. The STTR-only provisions are section 3(cc), the definition of Research Institution, section 7(k) on management of the STTR project, section 8(d) on allocation of intellectual property rights in an STTR award (cited in section 1(b)(1) as 8(c)), and section 12(e), the Phase 0 Proof of Concept Partnership pilot. SBIR.gov archives the last separate STTR directive, dated February 24, 2014.

Sources

1. 1Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Program Policy Directive, effective May 3, 2023 · U.S. Small Business Administration, SBIR.gov
2. 2Policy Directives · U.S. Small Business Administration, SBIR.gov
3. 3United States Code, 2024 Edition, Title 15, Section 638 - Research and development · U.S. Government Publishing Office
4. 4Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive; Final SBIR and STTR Policy Directives (84 FR 12794, April 2, 2019) · Federal Register, via U.S. Government Publishing Office
5. 5Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive; Notice of technical amendment (85 FR 50062, August 17, 2020) · Federal Register, via U.S. Government Publishing Office
6. 6Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive; Notice of technical amendments (88 FR 19704, April 3, 2023) · Federal Register, via U.S. Government Publishing Office
7. 7Small Business Innovation Research Program Policy Directive; Notice of amendments to final policy directive (79 FR 1303, January 8, 2014) · Federal Register, via U.S. Government Publishing Office
8. 8Public Law 119-83: Small Business Innovation and Economic Security Act · U.S. Government Publishing Office
9. 9About SBIR and STTR · U.S. Small Business Administration, SBIR.gov
10. 10Department of War SBIR Program, 2027 SBIR Commercial Solutions Opening, Release 1 preface · Department of War SBIR/STTR Program, DSIP

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